Connect Talent to Work by Enhancing Your Skills Management Practices

Tapping into an employee’s skill set can be valuable for organizations that want to build talent internally, but according to Mercer’s Global Skills Technology and Adoption Survey, only 43% of employers are connecting talent to work through their talent marketplace (the platform that matches employees with opportunities based on their skills, interests and career goals).

The consulting firm also found:

Nearly 60% of the surveyed organizations that do have talent marketplaces are uncertain of their effectiveness.
40% don’t incorporate skills into rewards and recognition.
28% don’t incorporate skills into performance management.

“Skills create a shared language for development that drives both personal and organizational momentum,” said Lisa Stella, a partner and career practice leader at Mercer. “An employee’s skills journey represents their growth and development throughout different roles, not just as they move from one to another. When organizations make that journey visible, they can shape talent development more intentionally — matching individual growth areas to strategic business priorities.”

Access bonus Workspan Daily Plus+ articles on this subject:

Untapped Opportunities

The Mercer report showed how organizations incorporate skills models into various talent practices (see table below); in some cases, skills are underutilized.

According to Mercer experts, organizations remain cautious about embedding skills within performance and reward practices since it requires more robust skills data. If managed correctly, the experts said AI can help in this area, while also doing its part to increase productivity.

Strategic workforce planning is another potential area for more skills development, said the experts. Mercer research showed that strategic workforce planning was one of HR’s top five people priorities for 2025, so there is an opportunity for leaders to embrace skills as the currency of work to improve short- and long-term planning.

Talent Practice	% of Orgs That Don’t Explicitly Use Skills	% of Orgs that Manually Enter Skills	% of Orgs that Have Skills Automatically Suggested
Career pathing	23%	30%	28%
Hiring — external	21%	36%	23%
Hiring — internal	19%	32%	26%
Learning and development	13%	38%	28%
Mentoring	21%	34%	9%
Opportunity/talent marketplace	26%	17%	32%
Performance management	28%	38%	26%
Rewards and recognition	40%	32%	26%
Strategic workplace planning	30%	28%	32%

Why Skills Are Crucial for Growth

According to Sara Hillenmeyer, the senior director of data science at Payscale, a compensation software and data company, an employee’s skills journey is important for their career development and trajectory.

“Compensation is increasingly driven by what an employee can do rather than just their job title or role,” she said. “When organizations leverage a competency-based pay plan, for example, employees can take control of their own earning potential by acquiring in-demand competencies and expanding their expertise.”

Hillenmeyer also noted that when employees are rewarded for the skills they gain over time, it can create a more equitable and motivating path for advancement.

‘A Significant Investment’

Utilizing skills in talent management can be challenging for some organizations, though. For example, shifting from a traditional job-based model to a skills-based one requires a significant investment in time, resources and organizational change, Hillenmeyer said.

“This level of strategic and structural change can be daunting, especially for companies without dedicated resources in compensation design or workforce planning,” she said. “As a result, widespread adoption of skills-based pay has been stagnant.”

Hillenmeyer suggested organizations survey and workshop the skills needed for all of their jobs individually, and then design, develop and validate a system for rewarding each skill.

Many organizations in the early stages of their skills journey are often still in pilot phases, noted Stella.

“Until skills are implemented enterprise-wide, it can be challenging to integrate them into talent management, which tends to be very process-heavy and uniform in approach,” she said. “Even then, it’s a significant lift.”

Tracking Skills

By actively tracking and managing their skills, employees can identify gaps, align with emerging industry needs and make more informed decisions about career development, Hillenmeyer said.

For employers, this type of skills management helps support smarter conversations around promotions and compensation. Hillenmeyer shared Payscale research found 25% of surveyed organizations included competitive skills into their compensation strategy.

Keeping track of skills is easiest when an organization has a technology-enabled skills inventory, Stella said, but even without a formal platform, simply documenting skills gained from projects, feedback or training can be powerful.

“Tracking skills helps employees take a more active role in shaping their careers — within their current company and beyond,” she said. “It’s a way to demonstrate progress, readiness for new opportunities and commitment to growth. ... Leaders have long sought objectivity in assessing performance and potential, especially in roles where impact isn’t easily measured. Skills offer a clearer, more consistent foundation for that.”

Editor’s Note: Additional Content

For more information and resources related to this article, see the pages below, which offer quick access to all WorldatWork content on these topics:

Connect Talent to Work by Enhancing Your Skills Management Practices

Untapped Opportunities

Why Skills Are Crucial for Growth

‘A Significant Investment’

Tracking Skills

#1 Total Rewards & Comp Newsletter